Eye on Washington – February 14, 2017

In last week’s House Energy and Commerce Health Subcommittee hearing on the Affordable Care Act, full Committee Chairman Greg Walden (R-OR) announced in his opening statement that the committee would consider legislation focused on generic drug pricing, coming after President Donald Trump’s meeting with pharmaceutical industry leaders. The legislation, H.R. 749, the Lower Drug Costs through Competition Act, was introduced by Rep. Kurt Schrader (D-OR) and Rep. Gus Bilirakis (R-FL). However, the committee ultimately postponed marking up the legislation this week, as Ranking Member Frank Pallone (D-NJ), Health Subcommittee Ranking Member Gene Green (D-TX), and Rep. Schrader sent a letter to Chairman Walden requesting that the legislation move through regular order in the Health Subcommittee in order to permit a legislative hearing and markup there.

The Lower Drug Costs through Competition Act seeks to address concerns with generic drug price increases by making it easier for competing generic drugs to come to market. Under this legislation, the Food and Drug Administration (FDA) would be required to act on generic drug applications within six months for generic drugs with limited competition or shortages. In addition, companies that successfully bring competing generic drugs to market may qualify for a voucher for future generic drug applications. Finally, the bill directs the Government Accountability Office to review the issue of Risk Evaluation and Mitigation Strategies that have been criticized for being abused to deter potential generic drug competition.

Concerns with a lack of competition in parts of the generic drug market were highlighted last year in multiple Congressional reviews of the issue. The House Committee on Oversight’s hearing on Mylan’s pricing of EpiPen included questions directed at the FDA as to whether its slow and costly processes have inhibited a competitor from entering the market to undercut Mylan’s price increases. Furthermore, the Senate Aging Committee’s December 2016 report on certain generic drug price increases found that some companies have sought to acquire generics drugs for which there was limited competition in order to increase prices.

While the bill’s advancement in committee has been slowed, it is likely to be a focus of bipartisan support for addressing drug pricing issues. The legislation appeals to Republicans who are interested in reforming the FDA and finding market solutions to drug pricing issues, rather than using the government’s powers to mandate restrictions on price increases or place additional burdens on the pharmaceutical industry. It may also appeal as a compromise to Democrats, who are feeling pressure from the party base on other high-profile proposals, such as direct negotiation on drug prices and allowing the reimportation of drugs from certain countries.

Price Confirmed, Despite Intense Finance Committee Process

Early Friday morning, the Senate voted 52 to 47 to confirm Rep. Tom Price (R-GA) as Secretary of Health and Human Services. Rep. Price’s nomination was advanced to the full Senate on February 1, 2017, amid contentious disagreement between Democrats and Republicans on the Senate Finance Committee. Democrats, concerned with further questions about Rep. Price, boycotted the January 31st markup of the nomination, denying the committee a quorum for voting. (The Finance Committee’s rules require a quorum for voting of one-third of the committee’s members and one Senator from each party.) Chairman Orrin Hatch (R-UT) reconvened the markup on February 1st and the Republicans suspended the quorum rule by unanimous consent and advanced the nomination.

Democrats lack the ability to block President Trump’s Cabinet nominees, which require only 51 votes since Democrats changed the Senate’s procedure in 2013, except for Supreme Court nominees who still require 60 votes. As a result, Democrats have resorted to other tactics to express their dissent. In addition to a boycott in a separate committee, Sen. Cory Booker (D-NJ) broke with Senate tradition and testified against the nomination of fellow Sen. Jeff Sessions (R-AL) for Attorney General.

While the Senate is often known for being a congenial institution, the acrimony of approving nominees is undermining that tradition and may portend the further breakdown of the Senate’s institutional norms. President Trump’s recent nomination of Tenth Circuit Appellate Court Judge Neil Gorsuch for the Supreme Court will be an important marker for whether the Senate will return to tradition or further break with precedent. While Democrats debate strategy on considering Gorsuch’s nomination, President Trump urged Senate Majority Leader Mitch McConnell to go “nuclear” if needed and end the 60-vote filibuster for Supreme Court nominees. Such a decision would have implications for other legislative priorities, as well as the future role of the minority in the Senate.

Resolutions Introduced to Halt IPAB Process for Medicare Cuts

On January 31, 2017, Sen. Ron Wyden (D-OR), Ranking Member on the Finance Committee, introduced S.J.Res. 16, a joint resolution to discontinue the Independent Payment Advisory Board (IPAB). The same resolution was also introduced by Sen. John Cornyn (R-TX) as S.J.Res. 17, and in the House by Rep. David Roe (R-TN) as H.J.Res. 51. IPAB, created as part of the Affordable Care Act, is designed to develop and implement cost-cutting proposals for Medicare. IPAB currently has no appointed members and its use is triggered only if Medicare spending exceeds specific targets. The IPAB could be trigged this year and a determination is required by April 30, 2017. However, if IPAB is triggered and has no members, the authority to offer cuts is directed by the Secretary of Health and Human Services and automatically implemented unless blocked by Congress. Recommendations would be due to Congress by January 25, 2018, for implementation in 2019.

However, IPAB’s authorizing statute provides a limited window during which Congress can pass a joint resolution blocking it from ever taking effect. The legislation noted was introduced during this window, which ended February 1, 2017. The statutory process also allows for expedited consideration in the Senate with a finite time for debate. The joint resolution requires the support of three-fifths of both chambers for passage, and then is considered by the President for his signature or veto. The joint resolution must be enacted by August 15, 2017, to block IPAB permanently.

While some in Congress have supported the existence of IPAB as a means to pressure the healthcare system to reduce costs, others have raised concerns with decisions potentially being made by an unelected, but Senate approved, committee. In addition, the change in parties controlling the White House has raised new concerns for Democrats with the Secretary of Health and Human Services recommending changes if the IPAB’s members are not approved in time.